Smith, who has $10,000, receives an extra dollar, as does Jones, who has $100,000. Smith receives more utility from the extra dollar than does Jones. This is an example of

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The law of diminishing marginal utility states that as a person consumes more of a good, the additional satisfaction (utility) they receive from each additional unit decreases. In this case, Smith receives more utility from the extra dollar than does Jones because Smith has less money to begin with. This is an example of interpersonal utility comparison, which is the comparison of the utility that different people receive from the same good.

Smith, Who Has $10,000, Receives an Extra Dollar, as Does